Pound Sterling Climbs to One-Week Highs following BoE Decision

Pound (GBP) Surges Higher as BoE Hints at Further Hikes

The Pound (GBP) jumped yesterday, hitting one-week highs against many of its peers, after a hawkish surprise from the Bank of England (BoE).

Although the BoE only hiked by 25 bps, and presented a gloomier outlook for the UK economy, it also said that policymakers would ‘act forcefully’ in the future if needed, suggesting more muscular action.

There’s no UK data out today, so Sterling may be influenced by domestic factors, including Brexit and the cost-of-living crisis.

Euro (EUR) Recovers as USD Weakens

The Euro (EUR) initially slipped yesterday morning as markets once again grew worried about fragmentation in the Eurozone.

However, the single currency managed to rally in the afternoon. The upside seemed driven by the Euro’s negative correlation to the US Dollar (USD). The US Dollar index declined by 0.75% during the European session, thereby boosting EUR.

This morning, the Eurozone’s final inflation rate reading for May could cause some movement if it differs from previous estimates. Otherwise, the single currency could struggle for direction.

US Dollar (USD) Undermined by Growth Concerns

The safe-haven US Dollar struggled yesterday, posting only modest gains against its weaker peers despite a risk-off market mood.

A raft of disappointing US data releases pressured the ‘Greenback’ in the afternoon. While each data release was not particularly impactful on its own, taken together they pointed towards slowing economic growth in the US.

Following the Federal Reserve decision on Wednesday, Fed Chair Jerome Powell is due to speak today. His comments could cause some movement.

Canadian Dollar (CAD) Slips as Oil Softens

The oil-linked Canadian Dollar (CAD) softened against the majority of its peers yesterday as a decline in crude prices dragged the ‘Loonie’ lower. In addition, an unexpected contraction in wholesale sales may have added to CAD’s downside.

Today’s PPI release could impact CAD, with increasing price pressures raising the likelihood of more Bank of Canada (BoC) rate rises. Oil price movements could also affect the Canadian Dollar today.

Australian Dollar (AUD) Subdued amid Recession Worries

The risk-sensitive Australian Dollar (AUD) was muted overnight, despite an uptick in Asian stock markets, as global recession fears worry investors.

New Zealand Dollar (NZD) Softens following Rate Rises

Likewise, the risky New Zealand Dollar (NZD) struggled in overnight trade, slipping against its stronger rivals. Recent rate hikes have increased fears that the global economy could falter.

Samuel Birnie

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